Elections No Deterrent To Soaring Land Prices

Although residential and commercial property sales have decelerated, land prices in Phnom Penh and a few key provinces are unusually on the up this year, going against the usual status quo of stagnating as elections approach.

Sorn Seap, CEO and founder of Key Real Estate, told Post Property earlier this week that although the sector’s activity is sluggish with many projects racing to complete, land prices in Phnom Penh and Sihanoukville are still increasing.

“In the current situation, some business people are waiting and buying land because they believe that the economy will spike after the election,” he said. “As a matter of fact, land prices for property north of Camko satellite city are climbing due to the many development projects happening in the area.”

The land prices in that area, and along Mong Rithy Street near Camko City, were $300 to $400 five years ago, but have now increased to $700 to $900 per square metre. Meanwhile, prime land along Mong Rithy Street is now selling from $1,000 to $1,500 per square metre, according to Sorn Seap’s estimation.

Based on Century 21 Mekong CEO Chrek Soknim’s observation, land prices are growing at about five to 10 percent this year.

“Land prices have yet to decrease, but transactions aren’t occurring as frequently as last year,” he said.

Soknim added that land where prices had climbed and many trade activities is still ongoing is around Phnom Penh Thmey, Kop Srov in Prek Pnov district, Sen Sok district, and along National Road 1, where much vacant land is still available.

According to a consumer sentiment survey conducted by realestate.com.kh, 54.6 percent of 5,000 respondents expect property prices to continue increasing over the course of the next year. Nonetheless, a primary report by Bunna Realty Group found that the land price growth in the first quarter of 2017 has slowed down compared to last year.

Pen Sokhea, head of evaluation at Bunna Realty Group, said land prices this year have not increased much because of numerous risks related to concerns over the election, causing prices in some areas to ease off.

He added that despite the deceleration, land prices in Phnom Penh Thmey and Camko City remain high due to the recent development as the area is now awaiting the completion of the second Aeon mall and some other boreys.

“The reason why owners decide to increase the price is because they see new infrastructure and various development projects, but these activities aren’t what they’re demanding,” he said.

“If you take demand into consideration, I doubt the price in this area would’ve soared as high as it did.”

Cheng Kheng, CEO of Huttons CPL – which has an office in Sihanoukville – said trade activities in Sihanoukville had increased along with the land prices, but he has yet to estimate the rate.

“Land prices in Sihanoukville are climbing because of the nonstop flow of investors, especially Chinese investors, but the prices haven’t reached boiling point yet,” he said.

Cambodian Valuers and Estate Agents Association president Kim Heang said this year was a peculiar case, with trade still active despite the upcoming election. Land prices naturally increase because trade is still ongoing, contrary to the past when property trades reached somewhat of a standstill in the months before elections.